The Federal Circuit rejected a motion for en banc review of a patent infringement case evaluating the willfulness standard and whether the standard should be changed in order to meet the interpretation provided by the Supreme Court in the Octane decision.

The FCC’s Net Neutrality Rules on Protecting and Promoting Open Internet

By Shuli Wang – Edited by Yaping Zhang

Two weeks after voting on regulating broadband Internet service as a public utility, on March 12, the Federal Communications Commission (”FCC”) released a document (the FCC Order and Rules) on net neutrality, which reclassifies high-speed Internet as a telecommunications service rather than an information service, thus subjecting Internet service providers (ISPs) as common carrier to regulations under Title II of the Communications Act of 1934. The purpose of the new rules is to ensure the free flow of bits through the web without paid-for priority lanes and blocking or throttling of any web content.

On February 27, 2015, President Obama released an administration draft of a proposed Consumer Privacy Bill of Rights Act. The proposed bill’s stated purpose is to “establish baseline protections for individual privacy in the commercial arena and to foster timely, flexible implementations of these protections through enforceable codes of conduct developed by diverse stakeholders.”

In a bold deal that Rob Lever at ABS-CBNnews.com has praised as a “savvy strategic move” and Peter Schiff at Business Insider has decried as evidence of “how dysfunctional and distorted our economy is,” Facebook acquired the instant messaging app WhatsApp for $19 billion in cash, stocks, and restricted stock units, totaling approximately 9.2% of Facebook’s net worth.

As of December 2013, WhatsApp boasted 450 million users, 72% of which are active daily.

Facebook is estimated to have paid $345 million per WhatsApp employee (there are only 55) or $42 per user.

The messaging app is presently growing at a rate of 1 million users a day. Since its founding five years ago, WhatsApp has gained users faster than any other social media site in history, including Facebook. To put this in perspective, since you started reading this post 350 new users joined WhatsApp.

Winkdex: The Bitcoin Price Index

The Winklevoss brothers, famous for their legal battle with Mark Zuckerberg over the founding of Facebook, have released a financial index—known as the Winkdex—providing a regularly updated price for Bitcoin. The shortage of stabilizing governance mechanisms and transparency tools applicable to the volatile cryptocurrency has led some, like Jeff John Roberts at GigaOm to welcome the index. Others, including Paul Vigna at the Wall Street Journal, question whether there is a real need for the Winkdex.

Nathaniel Popper at The New York Times speculates that rollout of the index indicates that the brothers’ proposed Bitcoin exchange-traded fund, the Winklevoss Bitcoin Trust, is moving closer to regulatory approval. The Securities and Exchange Commission is currently reviewing the fund, the first of its kind. Release of the index is also consistent with Bitcoin’s shift into the mainstream—GigaOm reports that Bitcoin ATMs will be arriving in certain U.S. cities this month.

The FCC’s New Net Neutrality Rules

The Federal Communications Commission (“FCC”) has promised to issue a new set of rules aimed at keeping the web free and open, one month after the United States Court of the Appeals for the District of Columbia Circuit struck down the agency’s prior net neutrality rules for illegally treating Internet service providers (ISPs) as regulated utilities. Verizon v. Fed. Commc’ns. Comm’n., No. 11-1355 (D.C. Cir. Jan. 14, 2014), hosted by Scribd.

Although the FCC has decided to not reclassify broadband as a public utility, the agency remains committed to deterring ISPs from charging companies (such as Amazon or Netflix) to stream their content through an Internet “express lane.” As reported by The New York Times, those championing net neutrality contend that such preferential treatment would harm smaller companies and prevent new players from competing with large and established content providers.

Relying on section 706 of the Telecommunications Act of 1996, Pub. L. No. 104, 110 Stat. 56 (1996) the new rules would, among other things, significantly expand the “Open Internet rules” and provide for greater case-by-case enforcement. The FCC will also closely consider preempting state laws that prevent cities and towns from offering broadband service to residents.

Comcast has proposed to acquire Time Warner Cable for $45.2 billion in stock, in a merger that could have far-reaching implications for the media and communications industry. Comcast hopes that the merger will further its longstanding strategy of growing into a broadband and media powerhouse. The merger is also expected to produce synergies, reducing costs by approximately $1.5 billion a year.

The Washington Post provides context for the merger, along with voices from both sides. Wired reviews Comcast’s previous merger with NBC and discusses the potential implications of the merger, while Ars Technica looks at Comcast’s and the FCC’s options. Above The Law criticizes the merger as attempting to consolidate power to control both content and conduit across the majority of the country. (more…)

The Federal Circuit affirmed the ruling of the United States District Court for the District of Delaware that one claim in Solvay S.A.’s (“Solvay”) patent was invalid because actions taken by Honeywell International, Inc. (“Honeywell”) qualified as prior art.

The Federal Circuit affirmed the district court’s ruling, despite conception of the invention in Russia, because Honeywell had reduced the invention to practice in the United States. Solvay, slip op. at 2. Under pre-America Invents Act law, foreign invention and reduction to practice would not invalidate a patent as prior art. Id. at 3. However, if the invention was “made in [the United States],” then it could qualify as prior art. Id. In so holding, the court clarified that the inurement doctrine — which, if applied in this case to Honeywell’s activity, would set the timing of prior art to the date that the Russian invention was reduced to practice in the United States — did not require an explicit order to reduce the invention to practice, but rather, could be implicit in an agreement. Id. at 16.

Solvay patented an improvement on the method for making a hydroflourocarbon, HFC-245fa, used primarily in preparing insulation materials. Id. at 4–5. A year before Solvay’s priority date, Honeywell and Russian engineers entered into a research contract for the development of a substantially similar method. Id. at 5. Honeywell personell in the United States ran that process before the priority date. Id. After Solvay sued for infringement, Honeywell argued that, because it had reduced the method to practice in the United States prior to Solvay’s application, Honeywell’s engineers were inventors under § 102(g)(2) (note that § 102(g) was removed via the America Invents Act), and thus independent claim one, the only one at issue on appeal, was invalid. Id. at 5­–6.

The key point of contention was whether the activities of Honeywell could inure to the Russian engineers. Id. at 8–9, 14. If inurement did not apply, then Honeywell’s reduction to practice prior to the patent’s priority date could not be attributed to the Russian inventors and Solvay’s patent would be valid. Id. at 8. Significantly, the court determined that the inurement doctrine — “defining when the activities of others inure to the benefit of the inventor” — does not require that the inventor, in this case the Russian engineers, direct the non-inventor to reduce the invention to practice. Id. at 14. The court emphasized that “inurement exists if the inventor authorizes another to reduce this invention to practice.” Id. at 16 (emphasis added). It cited a number of cases where an inventor’s idea was reduced to practice seemingly with his implied authorization but absent any express request, involvement, or at times, even his knowledge. Id. at 14–16. Thus, the court found that the research agreement between Honeywell and the Russian engineers was sufficient to establish inurement, thus cementing reduction to practice prior to Solvay’s application, invalidating the first claim of the patent. Id. at 17.

Judge Newman criticized the holding in his dissent, stating that the court was creating “a new class of secret prior art . . . .” Id. at 1 (Newman, J., dissenting). Newman emphasized that the Russian invention was disclosed in an unpublished application and that Honeywell had only tested the invention. He criticized the majority’s reliance on inurement doctrine, pointing out that inurement is limited to interference contests, where a foreign inventor receives the benefit of a earlier reduction to practice on his behalf in the United States in establishing his priority date. Inurement, however, “has no relation to whether that activity is prior art against the world.” Id. at 6 (emphasis added).Recognizing Honeywell’s activity as prior art “contravenes the policy and the letter of patent law,” id. at 1, and “[i]t is as unnecessary as it is inappropriate to so enlarge the scope of secret prior art,” id. at 8–9.

Last August, the well-known vacuum maker Dyson sued Samsung for patent infringement in the United Kingdom, where Dyson is based. Dyson alleged that Samsung’s MotionSync vacuums used technology that violated patents Dyson holds for technology in its MotoSync vacuums. According to Ars Technica, Dyson dropped the suit for unknown reasons, citing “loopholes in the patent system.”

Now, Samsung has filed a 10 billion won (about $9.43 million) lawsuit in South Korea, claiming damages from Dyson for hurting Samsung’s public image by portraying Samsung as a “repeat patent violator or copycat.” Samsung has previously engaged in legal battles with Apple over patent infringement.

“Samsung has the right to assess the damage the lawsuit has caused. Samsung is going to take a hard-line stance against patent trolls that use litigations as a marketing tool,” said a Samsung executive to The Korean Times via telephone last Sunday.

Maker of Candy Crush Saga Files for an IPO

King Digital Entertainment, maker of the smash hit mobile game Candy Crush Saga, filed papers for an initial public offering (“IPO”) with the U.S. Securities and Exchange Commission this week on Tuesday. The company has set $500 million as the fundraising goal for its IPO. The company would become the biggest publicly held company in the casual gaming industry.

Candy Crush Saga has been a huge source of profit for King Digital Entertainment. The game debuted in summer 2012. Since then, the company’s profits jumped from $7.8 million in 2012 to $567.6 million in 2013. Candy Crush has an average of 93 million users per day and is the second most popular game in Apple’s App Store.

Venture Beat has pointed out one potential problem with the filing. King’s revenues declined from $621 million in the third quarter of last year to $602 million in the fourth quarter. Moreover, in its IPO filing, King acknowledges that “a small number of games currently generate a substantial majority of our revenue,” but emphasizes that it is attempting to diversify its line up of games beyond Candy Crush.

AT&T Releases First Transparency Report

On Tuesday, AT&T published its first transparency report, revealing that it received nearly 302,000 data requests in 2013 relating to criminal and civil cases. The requests included more than 248,000 subpoenas, close to 37,000 court orders, and more than 16,000 search warrants. AT&T says it has rejected the requests in 3,756 cases and only provided partial data in 13,707 cases.

In addition, AT&T was also asked nearly 38,000 times last year to disclose information relating to the real-time and historic locations of its customers.

In its report, AT&T revealed that it received between 2,000 and 2,999 National Security Letters in 2013 (the Department of Justice limits how specific AT&T can be in this context). In the first half of 2013, AT&T received between 0 to 999 requests under the Foreign Intelligence Surveillance Act (FISA) for user data that impacted between 35,000 and 35,999 customer accounts.

AT&T’s report comes after Verizon’s release of a transparency report in January, both reports possibly responding to shareholder proposals filed by the ACLU and other investors. Verizon received about 320,000 data requests, including 164,000 subpoena requests, and between 1000 to 1999 National Security Letters.

On February 6, 2014, California State Senator Mark Leno (D-San Francisco) introduced Senate Bill 962. The bill would mandate that all smartphones sold in California must be equipped with a “kill switch,” allowing consumers to disable a lost or stolen phone. S.B. 962 at 1. The bill aims to deter phone thefts, which account for one in three robberies in the United States. Id. at 2. California State Assemblywoman Nancy Skinner said she will carry the bill, if it clears the Senate, reports SFGate.

According to Mashable, if the bill passes, California would lead the nation in requiring anti-theft technology for smart phones. Ars Technica speculates that, due to California’s size, this may lead to a de facto standard nationwide.